Thursday, August 17, 2017

The MoviePass Math, Part 2

Well, there are bombshells, and there are world-shaking, potentially industry obliterating bombshells, and MoviePass just gave us the latter.

The movie theater subscription plan has just dropped their monthly fee down to $9.95 for unlimited films in all areas. They also removed a bunch of the restrictions - no more different pricing based on different markets, no more waiting 24 hours between screenings. The only major hurdles are figuring out which theaters will accept the MoviePasses and getting the incredibly overwhelmed app and website to work properly. Previously, the cheapest unlimited plan was in the $40 range, and the very cheapest plan was $15 for two movies a month in "Tier 1" markets. I live in the most expensive "Tier 3" market, where an unlimited plan is $50.

To put this into further context, a single early bird matinee ticket at my local theater is $8.50. Simply watching two movies in theaters a month pays for the subscription. But beyond that, renting three movies a month from iTunes is $9 at least. My Netflix subscription is $8 a month. Using a MoviePass to watch first-run films in theaters is suddenly more cost effective than watching them at home. Heck, going to an evening show every evening is looking downright frugal. I could easily see myself going to screenings at least once a week - or even every day during Oscar season - if all the movies I wanted to see were in participating theaters.

The MoviePass execs have already admitted that the $9.95 price point is not sustainable in the long run. Prices will go back up and some restrictions seem inevitable. Right now, they're trying to grab as much market share as they can before the theaters inevitably counter with their own loyalty programs or figure out a way to litigate their way out of the situation. AMC is already vowing to do everything they can to keep MoviePass out of their theaters, though MoviePass will be paying the full ticket prices to exhibitors. Frankly, the increased traffic could be viewed as a windfall, since it means more concession sales and other spending in theaters. However, what AMC and other theaters are afraid of is that filmgoers will get used to the cheaper ticket prices and come to expect the convenience of subscriptions plans.

While I can sympathize to some extent with the theaters, there's been a sense for a while that something about the exhibition business has to change. The summer box office has been down this year, and theater stocks have suffered on Wall Street. We've had a discouraging run of bombs, and many culture vultures have noted that everyone's talking about television instead of the movies this season. Ticket prices, while not as outrageous as I like to make them out to be, have been rising steadily for years, reducing attendance numbers and pushing the industry to make more blockbusters. MoviePass's stunt might revive the concept of the casual moviegoer, the type of viewer that once went to the movies regularly and didn't treat them as a special event.

Or it could all backfire spectacularly. The theaters could end up overwhelmed with new MoviePass users, and the service could quickly go out of business if they can't handle the technical logistics or the sheer volume of business. The only way MoviePass makes money with this model is if there are subscribers who simply pay for the service without using it much, which I find unlikely. Only movie nerds are even aware that MoviePass exists, and will be taking as much advantage as they possibly can. On the other had, subscription plans for theaters have been successfully implemented in many other countries, and I think it's likely that some version of this is going to stick in the U.S.

Alas, I personally can't take advantage of the new MoviePass deal the way that I'd like to. I simply don't have the free time to set aside three hours for an average movie theater trip more once every two months or so. And I don't see that changing for at least another five years, by which time MoviePass will have either raised their prices significantly or gone the way of other ambitious business disrupters like Aereo. But even if I have to stay on the sidelines, at least it'll be fascinating to watch how this all unfolds.


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